Emanuel, suburban mayors join forces on pension reform

José M. Osorio, Chicago Tribune

Chicago Mayor Rahm Emanuel is joined at City Hall in Chicago by approximately 30 mayors from across Illinois to speak on the challenges they all face in developing retirement security solutions for their cities.

Chicago Mayor Rahm Emanuel is joined at City Hall in Chicago by approximately 30 mayors from across Illinois to speak on the challenges they all face in developing retirement security solutions for their cities. (José M. Osorio, Chicago Tribune)

John ByrneTribune reporter

A crowd of suburban and Downstate mayors sounded the alarm on their pension woes today, standing with Mayor Rahm Emanuel to warn their communities could face bankruptcy if state lawmakers don't fix their police and fire department retirement funds.

Heads of several municipalities said they’re worried the state legislature will deal with the state's $80 billion in unfunded pension liabilities but not address the hole in Chicago pensions or the perilous structural problems in the hundreds of smaller municipal systems around the state.

Gerald Bennett, mayor of Palos Hills and president of the Southwest Conference of Mayors, said lawmakers need to understand severe pension shortfalls aren’t particular to Illinois’ largest city.

“Mayor after mayor, if they had a big box outside the doors in Springfield, are ready to tell them: ‘We’re going to drop the keys to city hall in that box. You guys have run the show for so long, maybe you’d like to run the city and village,’” Bennett said at a news conference at which Emanuel was joined by about two dozen municipal leaders. “That’s the financial crisis we all face.”

It was the third straight day Emanuel pressed the pension issue, following his Tuesday trip to Springfield to address members of the General Assembly and a Wednesday letter to the city employees who would take a pension hit under the austerity measures he has proposed.

Emanuel said lawmakers need to look past the pressure they’re getting from organized labor and make the tough decisions required to bring the state’s pensions into balance.

“I do think — and any mayor can add their voice on this — acting as if this is not difficult, but that if you just do what we’re doing now and that this is going to resolve itself, that is the most dishonest thing, the most irresponsible thing to do,” Emanuel said.

Emanuel said he isn’t willing to consider new revenue sources like tax increases or leasing Midway airport to help fund pensions because the structural problems with the system are too severe.

He declined to discuss whether he would consider raising taxes if the General Assembly fixes those structural problems.

On Tuesday, Emanuel called for raising retirement ages for city workers and freezing cost-of-living increases for retired employees for 10 years.

He also proposed requiring city workers to pay more toward their retirement, while allowing “newer” workers the option to join a 401(k)-style retirement plan.

Union leaders weren’t happy with his proposal.

Surrounded by the mayors Thursday at City Hall, Emanuel said he remains open to union ideas on repairing the pension system.

But Emanuel said any pension reform package has to take into account the state’s other cities, where 638 separate police and fire pension systems are funded largely through local property taxes.

“Make sure that the local governments, also, their challenges are addressed, because if you don’t address them, we’re not fixing the problem,” Emanuel said.

Christopher Canning, president of the Village of Wilmette and head of the Northwest Municipal Conference, endorsed Emanuel’s outline for pension changes, and added lawmakers should look at consolidating the police and fire pensions in municipalities outside Chicago into a single retirement fund that could be more efficient and get better returns on investment.

Canning said residents in Wilmette quadrupled their contributions to police and fire pensions between 2000 and 2010, but saw the level of funding in the plan go down from over 94 percent to around 70 percent.

“That, my friends, is an unsustainable system,” Canning said. “You pay more in, and you get further and further behind.”